Minnesota home foreclosures could hit record in 2008
MINNEAPOLIS -- Minnesota could have a record number of foreclosures in 2008, according to a report. A study commissioned by the Greater Minnesota Housing Fund predicts that 28,000 homes will be foreclosed on in 2008, a 39 percent increase from a ...
MINNEAPOLIS -- Minnesota could have a record number of foreclosures in 2008, according to a report.
A study commissioned by the Greater Minnesota Housing Fund predicts that 28,000 homes will be foreclosed on in 2008, a 39 percent increase from a year ago. If those projections are accurate, that means one in every 31 households statewide will have gone through the foreclosure process from 2005 to the end of 2008.
"The situation keeps looking more dire," said Warren Hanson, president of the housing fund, a nonprofit aimed at creating and preserving affordable housing in Minnesota. "We're worried that home prices are in a downward spiral and that this economy is getting worse."
The report shows that the eight counties projected to have the highest foreclosure rates surround the Twin Cities metropolitan area. In 2007, when one in every 100 households was in foreclosure, the counties with the highest rates were Sherburne, Isanti, Mille Lacs, Pine, Wright, Chisago, Le Sueur and Kanabec.
Those rural areas were popular with home builders, speculators and homeowners who found that the equity they once had was fueled by the steepest runup in home prices in more than a generation.
Economists predict rising foreclosures will be a drag on home prices for years and will impede the broader market's recovery.
Wells Fargo senior economist Scott Anderson said that, on average, a house will automatically lose about 25 percent of its value when it goes into foreclosure and that the pervasiveness of the problem throughout the state will drive down prices everywhere.
"It's a problem that's going to hang over the consumer for some time to come," he said.
Anderson said the projected 2008 data are based solely on first-quarter data and the reliability rate on the 2007 data. The data don't take into account other important factors, such as resets on variable-rate mortgages and home price trends, which could make the numbers even worse.
Information from: Star Tribune, http://www.startribune.com